Update shared on27 Aug 2025
Fair value Increased 1.51%Despite continued earnings disappointments, muted sales outlook, and renewed structural concerns in spirits demand, analysts see valuation support and international growth potential as mitigating factors, resulting in a marginally higher consensus Analyst Price Target for Brown-Forman, increasing from $31.44 to $31.92.
Analyst Commentary
- Recent guidance and earnings have consistently disappointed, with Q4 results and FY26 outlook missing Street expectations, driving a continuous cycle of estimate downgrades and share de-rating.
- Ongoing pressures in the spirits category, including weaker sales trends, tariff uncertainty, and distributor changes, are expected to result in negative low-single-digit organic sales and operating income growth.
- Structural concerns about the long-term sustainability of global spirits demand have resurfaced, intensifying the debate over whether challenges are temporary or indicate a more permanent shift, resulting in lower valuation multiples.
- The domestic market has stalled, but bullish analysts point to valuation support at current levels, a compelling international growth opportunity, and potential improvement in cash conversion as the investment cycle ends.
- Near-term volatility is expected to persist until there is greater visibility into recovery in the spirits space and resolution of key external risks, with consensus being cautious on the timeline for any meaningful turnaround.
What's in the News
- Brown-Forman is exploring opportunities in the emerging cannabis beverage market, aiming to leverage the legal status of hemp-derived THC as larger alcohol players seek entry (Reuters, 2025-07-23).
- The U.S. Dietary Guidelines are expected to change, with the longstanding recommendation to limit alcohol intake possibly being dropped in favor of broader language encouraging moderation, which could impact alcohol consumption trends (Reuters, 2025-06-18).
- CFO Leanne Cunningham will retire effective May 1, 2026, after over 30 years with Brown-Forman, initiating an executive leadership transition (Key Developments, 2025-08-25).
- For fiscal 2026, Brown-Forman projects a low-single digit organic net sales decline and a similar decrease in organic operating income (Key Developments, 2025-06-05).
- Industry-wide developments, including regulatory changes and shifts in health guidance, are prompting strategic evaluation and adaptation among major alcohol manufacturers, including Brown-Forman (Reuters, 2025-06-18 & 2025-07-23).
Valuation Changes
Summary of Valuation Changes for Brown-Forman
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $31.44 to $31.92.
- The Consensus Revenue Growth forecasts for Brown-Forman has risen from 0.9% per annum to 0.9% per annum.
- The Future P/E for Brown-Forman remained effectively unchanged, moving only marginally from 21.06x to 21.39x.
Disclaimer
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